Uber will slash about 3,700 full-time jobs and Chief Executive Officer Dara Khosrowshahi will forgo his base pay for the rest of the year, the company said on Wednesday as the COVID-19 pandemic is decimating ride-hailing firms.
Uber and rival Lyft were under pressure from investors to produce results but the coronavirus-led lockdowns forced them to cut costs and withdraw their full-year financial forecasts as demand for app-based rides fell sharply worldwide.
Uber said the cuts, affecting 17 per cent of his employee count, included his customer service and recruitment staff, and he expects to pay around $20 million (around Rs. 152 crores) in severance costs and related charges.
Lyft laid off 982 workers last week, about 17 per cent of its staff, and slashed top executive base pay in addition to hundreds of furloughing workers.
"On the ride-sharing line, Uber and Lyft face Herculean-like obstacles ahead as the current paradigm is likely to shift these companies' (and competitors') business models in the near future," Wedbush Securities analyst Daniel Ives said.
Ives also said the pandemic could shift consumer behavior as work-from-home becomes more widespread and people are becoming more wary about using cab services because of concerns about previous passengers' safety.
A drop in rides also affects the profits of drivers employed by the corporations as contractors, with Uber alone having 3.9 million of them on his website.
California and three of its largest cities sued Uber and Lyft on Tuesday, accusing them of illegally classifying their drivers as independent contractors rather than employees, evading rights in the workplace and denying compensation from the workers.
But Uber, who operates in more markets around the world than Lyft, with his food delivery company could recover some lost revenue.
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